Correlation Between EVN AG and C PARAN

Can any of the company-specific risk be diversified away by investing in both EVN AG and C PARAN at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining EVN AG and C PARAN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EVN AG and C PARAN EN, you can compare the effects of market volatilities on EVN AG and C PARAN and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in EVN AG with a short position of C PARAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVN AG and C PARAN.

Diversification Opportunities for EVN AG and C PARAN

0.85

Correlation Coefficient

EVN AG  C PARAN

Very poor diversification

The 3 months correlation between EVN and ELP1 is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding EVN AG and C PARAN EN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C PARAN EN and EVN AG is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on EVN AG are associated (or correlated) with C PARAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C PARAN EN has no effect on the direction of EVN AG i.e., EVN AG and C PARAN go up and down completely randomly.

Pair Corralation between EVN AG and C PARAN

Assuming the 90 days horizon EVN AG is expected to under-perform the C PARAN. But the stock apears to be less risky and, when comparing its historical volatility, EVN AG is 1.33 times less risky than C PARAN. The stock trades about -0.29 of its potential returns per unit of risk. The C PARAN EN is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  628.00  in C PARAN EN on September 23, 2024 and sell it today you would lose (68.00) from holding C PARAN EN or give up 10.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

EVN AG  vs.  C PARAN EN

EVN AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVN AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

C PARAN EN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C PARAN EN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with EVN AG and C PARAN

The main advantage of trading using opposite EVN AG and C PARAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVN AG position performs unexpectedly, C PARAN can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in C PARAN will offset losses from the drop in C PARAN's long position.

The idea behind EVN AG and C PARAN EN pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.